Owning versus renting your home

In this climate of house prices plummeting, owning a home does not seem very attractive. They say it is okay if you stay for they long-term, whatever that is. We had financial problems and decided two years ago to sell our family home and rent instead. That decision has been absolutely wonderful for us, and so this article is about that story.

First of all may I refer you to a web page that does a kind of comparison of owning versus renting. The first thing you should notice is the title of the right hand column “considerations”, which really means “disadvantages”, bu they don’t want to say that because this website like a lot of others is in the game of selling mortages.

Yes, if you have a home you have an asset. That asset you hopefully realise at some point in the future. This is based on the premise that the rest of the world desires that asset. If they do not desire your asset then your asset has less value over time. The general argument as to why people desire such an asset is two things: firstly general government propaganda that says “owning your own home is best”, and the general rise in population implying there is a continual demand for new homes.

Hmm.

So where is this wrong? Well let me start and look at the needs of a family, over time. You grow up, start courting, get married, have a baby or two, establish your home, the kids grow up and they leave home and you retire. Look at this in terms of your housing needs. Initially you live in your paents home, so no cost to you. Then when you get married (excuse me for taking societal “norms”, whatever they are) and you at least need a home big enough for two people. Then you have kids and suddenly you need a home big enough for, say four people. Then your kids leave home – and lo and behold what are your needs? Two people a gain, plus some spare for visitors including your kids. Then, sad to say, one of you (or me) will die and you have a huge house around your neck with just you in it.

So for 20 years of your home owning life you need a large house. Before and after all you need is an apartment or a small home. People stay in their large mansions for several reasons. Primarily it is memories. Another argument is something like “stabilty”. But we are talking about the biggest investment of your life. Is it right to put all your eggs in one basket?

Don’t get me wrong, owning our own home is a great thing. Just the propaganda is so huge that you need to see it for what it is, and realise there are other options, and options with big upsides. And that is renting.

We rent our home. We did not do this out of choice, but it has been a great decision for us. Previously our mortage hung around our neck like a vice, if you excuse the cliche. So what have been the advantages of renting.

Firstly we were able to get a home that was larger for less money, much less loney, like a third cheaper on our monthly outgoings. Not only was the new house larger it was very much more interesting. When you hunt for a home to rent there are some damned fine properties out there with real character that to buy would be very difficult, very traumatic – but renting is a easy.

So the home we rented was old, described locally as the gingerbread cottage because it was so pretty. Everyone who viisted it loved it. People walking by would stop and talk about it. Truly jaw dropping. All this for less money? Now if we had owned this home there would have been high maintenance costs. But when renting maintenance drops to zilch, zero. Not only that you have no probelms, no hassle getting a plumber or a carpenter. You have no problems fixing the boiler. You don’t even have to take time off work and stay at home for one of these handymen to appear, or not. Instead you just make one phone call to your landlord and that is it, job done.

My second major point is the cost and trauma of moving home. If you rent then moving home is a doozy. It is so easy & cheap. You do not have to pay an taxes to the government, you don’t have to pay estate agent fees, you don’t have to pay legal fees. Our last move cost us nada, nothing. Well perhaps that is a slight exaggeration, probably it cost us say £200 total. Compare that with the cost of moving home when you own it and my guess is that could add up to £10,000?

Oh, and in the UK now we have HIPS so even before you begin to move home you have to pay £500 for a document to prove your home is worth selling.

There is one final point that I would like to make. This is about the general concept of downsizing. Most people who own their home do so and store absolute garbage in tehir lofts or attics. Yes, they may be family treasures but often the real value is nothing. And what you are realy doing is having a large home to store – garbage.

Okay that is controversial. I hear you say, “other people have garbage, I don’t”. But do you really need all this stuff? I recommend downsizing. Getting rid of this stuff that is cluttering up your life is very therapeutic. It is hard to start, but if you don’t do it then when you die you are just storing problems for your children to sort out.

Monetize some of it. Give stuff away. The key thing is to think about what is important to you. In my opinion that is your family and your friends. It also includes your career. What it does not include is a pile of bricks.

One final thought. If you are in financial problems due to high mortgage costs then changing from owning to renting is a big change. Do not take the decision lightly. Do not take it based on my advice. Think about what is important to you. Also in today’s climate selling your home could be very difficult. However, my prediction, for what it is worth is that selling is not going to be easy for let us say another 10 years? Yes, I suggest that house prices are not going to reach the previous high for another ten years.